Las Vegas Sands' Inkblot Test

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The latest report from Las Vegas Sands (NYSE: LVS) has something for everybody -- the bulls, the bears, and the nervous.

For the bulls, Las Vegas Sands posted diluted earnings per share of $0.03, excluding one-time items, beating the Wall Street consensus forecast of a loss of $0.01.

Healthy business in Macau helped offset a weak Las Vegas, although the company expects Las Vegas to improve in 2010. The Marina Bay Sands casino/resort in Singapore remains on track to open in the first quarter of 2010.

For the bears, revenue of $1.14 billion slightly trailed the average analyst estimate of $1.17 billion. Although revenue topped the year-ago period's $1.11 billion, the comparison has a few caveats. This year includes the Bethlehem, Pa., casino, which opened in May. It also includes a full quarter's results for the Four Seasons hotel/casino complex in Macau, versus only 34 days for the year-ago period.

Waiting for the deals
As for the nervous, Las Vegas Sands didn't offer any solid updates on the prospects for the Hong Kong stock exchange IPO for a piece of the Macau business. Chairman and CEO Sheldon Adelson teased analysts Thursday by saying there would be news "in the very near future." (On Friday, several news reports, citing unidentified sources, said the Hong Kong exchange had granted approval for the stock listing, which is expected to raise at least $2 billion.)

The company also didn't offer any details about comments made to Bloomberg last week that it was trying to arrange additional financing for its Macau business. The company hasn't set a date for restarting construction on a major casino/resort development, but it said the project could be completed by June 2011.

Data and hope
Las Vegas Sands issued its results after markets had closed Thursday. With shares up more than 2% on Friday, it appears optimism has struck the company -- as opposed to Monday, Tuesday, and Wednesday, when shares fell.

Macau is the company's biggest source of revenue, and financing for the uncompleted construction and the IPO are crucial. Wynn Resorts (Nasdaq: WYNN) recently completed aHong Kong IPO, giving investors 25% of the company's Macau operations. The IPO was well-received and got off to a good start, but the stock recently slipped below the offering price.

At Las Vegas Sands' Venetian Macau resort/casino, third-quarter net revenue was down 5.5%, but operating income was up 17.2% versus the year-ago quarter. At Sands Macau, net revenue rose 13% while operating income jumped 126%.

In Las Vegas, revenue fell 26% to $228.1 from the year-ago quarter, because of less gambling and reduced room rates. However, Adelson said bookings for 2010 were encouraging, adding that his Las Vegas properties have more group room bookings in 2010 than it expects for 2009.

More news coming
The third-quarter casino story hasn't been completely written, especially for Macau. Next week, MGM Mirage (NYSE: MGM), which has a big presence in Las Vegas and a joint-venture casino in Macau, will issue third-quarter results. Hong Kong-based Melco Crown Entertainment (Nasdaq: MPEL) is expected to announce its results in mid-November.

Note to Las Vegas Sands: This isn't a Rorschach test -- investors don't want inkblots and psychological interpretation to decipher the future regarding financing and expansion. Facts rather than hints will help them decide whether they leave the nervous group and join the bulls or the bears.